Enhanced Investments - Financial Portal

Published: 2021-04-29

Consolidated financial statements
CONSOLIDATED INCOME STATEMENTS
FOR THE PERIOD ENDED MARCH 31
(IN MILLIONS OF CANADIAN DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED)NOTE	2021	2020
Operating revenues	3	5,706	5,640
Operating costs	3, 4	(3,277)	(3,222)
Severance, acquisition and other costs	5	(89)	(16)
Depreciation		(895)	(858)
Amortization		(238)	(230)
Finance costs
Interest expense		(267)	(277)
Interest on post-employment benefit obligations	10	(5)	(12)
Impairment of assets		(3)	(7)
Other income (expense)	6	8	(47)
Income taxes		(253)	(243)
Net earnings from continuing operations		687	728
Net earnings from discontinued operations		–	5
Net earnings		687	733
Net earnings from continuing operations attributable to:
Common shareholders		642	675
Preferred shareholders		32	38
Non-controlling interest		13	15
Net earnings from continuing operations		687	728
Net earnings attributable to:
Common shareholders		642	680
Preferred shareholders		32	38
Non-controlling interest		13	15
Net earnings		687	733
Net earnings per common share – basic and diluted	7
Continuing operations		0.71	0.74
Discontinued operations		–	0.01
Net earnings per common share – basic and diluted		0.71	0.75
Weighted average number of common shares outstanding - basic (millions)		904.5	904.1

Consolidatedfinancial statements
34 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	FOR THE PERIOD ENDED MARCH 31
	(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)		2021	2020
	Net earnings from continuing operations	687	728
	Other comprehensive income from continuing operations, net of income taxes
	Items that will be subsequently reclassified to net earnings
				Net change in value of publicly-traded and privately-held investments, net of income taxes of nil for the three
				months ended March 31, 2021 and 2020, respectively	(3)	(3)
				Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($24) million and
				($116) million for the three months ended March 31, 2021 and 2020, respectively	65	318
	Items that will not be reclassified to net earnings
				Actuarial gains on post-employment benefit plans, net of income taxes of ($420) million and ($634) million for the
				three months ended March 31, 2021 and 2020, respectively (1)		1,145	1,731
				Net change in value of derivatives designated as cash flow hedges, net of income taxes of $2 million and
				($21) million for the three months ended March 31, 2021 and 2020, respectively	(6)	57
	Other comprehensive income from continuing operations	1,201	2,103
	Net earnings from discontinued operations attributable to common shareholders	–	5
	Total comprehensive income	1,888	2,836
	Total comprehensive income attributable to:
	Common shareholders	1,843	2,778
	Preferred shareholders	32	38
	Non-controlling interest	13	20
	Total comprehensive income	1,888	2,836
	(1) The discount rate used to value our post-employment benefit obligations at March 31, 2021 was 3.4% compared to 2.6% at December 31, 2020. The discount rate used to value our post-employment
	benefit obligations at March 31, 2020 was 4.2% compared to 3.1% at December 31, 2019.

					Consolidated	financial statements
BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt \| 35

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)NOTE	MARCH 31, 2021	DECEMBER 31, 2020
ASSETSCurrent assets
Cash		1,907	224
Cash equivalents				700	–
Trade and other receivables		3,247	3,528
Inventory				459	439
Contract assets				563	687
Contract costs				424	402
Prepaid expenses				345	209
Other current assets	8			244	199
Total current assets		7,889	5,688
Non-current assets
Contract assets				236	256
Contract costs				344	362
Property, plant and equipment		27,370	27,513
Intangible assets		13,227	13,102
Deferred tax assets				107	106
Investments in associates and joint ventures				745	756
Post-employment benefit assets	10	2,601	1,277
Other non-current assets	8	1,124	1,001
Goodwill		10,606	10,604
Total non-current assets		56,360	54,977
Total assets		64,249	60,665
LIABILITIESCurrent liabilities
Trade payables and other liabilities		3,723	3,935
Contract liabilities				762	717
Interest payable				181	222
Dividends payable				804	766
Current tax liabilities				271	214
Debt due within one year	9	3,786	2,417
Total current liabilities		9,527	8,271
Non-current liabilities
Contract liabilities				242	242
Long-term debt	9	24,965	23,906
Deferred tax liabilities		4,285	3,810
Post-employment benefit obligations	10	1,723	1,962
Other non-current liabilities		1,141	1,145
Consolidatedfinancial statements
Total non-current liabilities		32,356	31,065
Total liabilities		41,883	39,336
EQUITYEquity attributable to BCE shareholders Preferred shares		4,003	4,003
Common shares		20,400	20,390
Contributed surplus		1,154	1,174
Accumulated other comprehensive income				163	103
Deficit		(3,693)	(4,681)
Total equity attributable to BCE shareholders		22,027	20,989
Non-controlling interest				339	340
Total equity		22,366	21,329
Total liabilities and equity		64,249	60,665
36 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

ATTRIBUTABLE TO BCE SHAREHOLDERS

ACCUM-

ULATED

OTHER

NON-

CONTRI-

COMPRE-

CONTROL-

FOR THE PERIOD ENDED MARCH 31, 2021

PREFERRED

COMMON

BUTED

HENSIVE

LING

TOTAL

(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)

SURPLUS

INCOME

DEFICIT

TOTAL

INTEREST

EQUITY

Balance at December 31, 2020

4,003

20,390

1,174

103

(4,681)

20,989

340

21,329

Net earnings

–

674

687

Other comprehensive income

–

1,145

1,201

–

1,201

Total comprehensive income

–

1,819

1,875

1,888

Common shares issued under employee stock option plan

–

(1)

–

Other share-based compensation

–

(19)

–

(8)

(27)

–

(27)

Dividends declared on BCE common and preferred shares

–

(823)

–

(823)

Dividends declared by subsidiaries to non-controlling

interest

–

(13)

Settlement of cash flow hedges transferred to the cost

basis of hedged items

–

Other

–

(1)

Balance at March 31, 2021

4,003

20,400

1,154

163

(3,693)

22,027

339

22,366

ATTRIBUTABLE TO BCE SHAREHOLDERS

ACCUM-

ULATED

OTHER

COMPRE-

NON-

CONTRI-

HENSIVE

CONTROL-

FOR THE PERIOD ENDED MARCH 31, 2020

PREFERRED

COMMON

BUTED

INCOME

LING

TOTAL

(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)

SURPLUS

(LOSS)

DEFICIT

TOTAL

INTEREST

EQUITY

Balance at December 31, 2019

4,004

20,363

1,178

161

(4,632)

21,074

334

21,408

Net earnings

–

718

733

Other comprehensive income

–

368

1,730

2,098

2,103

Total comprehensive income

–

368

2,448

2,816

2,836

Common shares issued under employee stock option plan

–

(1)

–

Other share-based compensation

–

(21)

–

(15)

(36)

–

(36)

Dividends declared on BCE common and preferred shares

–

(791)

–

(791)

Dividends declared by subsidiaries to non-controlling

interest

–

(14)

Settlement of cash flow hedges transferred to the cost

basis of hedged items

–

(1)

–

(1)

–

(1)

Balance at March 31, 2020

4,004

20,386

1,156

528

(2,990)

23,084

340

23,424

Consolidated

financial statements

BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt | 37

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31
(IN MILLIONS OF CANADIAN DOLLARS) (UNAUDITED)NOTE	2021	2020
Cash flows from operating activitiesNet earnings from continuing operations
		687	728
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities Severance, acquisition and other costs	5	89	16
Depreciation and amortization		1,133	1,088
Post-employment benefit plans cost	10	79	87
Net interest expense		263	270
Impairment of assets		3	7
Income taxes		253	243
Contributions to post-employment benefit plans		(79)	(79)
Payments under other post-employment benefit plans		(15)	(17)
Severance and other costs paid		(43)	(35)
Interest paid		(306)	(316)
Income taxes paid (net of refunds)		(109)	(233)
Acquisition and other costs paid		(4)	(9)
Change in contract assets		144	155
Change in wireless device financing plan receivables		(91)	(76)
Net change in operating assets and liabilities		(12)	(400)
Cash from discontinued operations		–	22
Cash flows from operating activities		1,992	1,451
Cash flows used in investing activities
Capital expenditures		(1,012)	(777)
Other investing activities		(21)	(6)
Cash used in discontinued operations		–	(7)
Cash flows used in investing activities		(1,033)	(790)
Cash flows from financing activities
Decrease in notes payable and bank advances		(357)	(230)
(Decrease) increase in securitized trade receivables		(13)	400
Issue of long-term debt	9	2,915	3,281
Repayment of long-term debt		(226)	(709)
Issue of common shares		10	22
Purchase of shares for settlement of share-based payments		(91)	(94)
Cash dividends paid on common shares		(753)	(716)
Cash dividends paid on preferred shares		(31)	(36)
Cash dividends paid by subsidiaries to non-controlling interest		(13)	(14)

Other financing activities		(17)	(30)
Cash used in discontinued operations		–	(1)
Cash flows from financing activities		1,424	1,873
Consolidatedfinancial statements
Net increase in cash		1,683	802
Cash at beginning of period		224	141
Cash at end of period		1,907	943
Net increase in cash equivalents		700	1,732
Cash equivalents at beginning of period		–	4
Cash equivalents at end of period		700	1,736
38 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

	Notes to consolidated financial statements
	These consolidated interim financial statements (financial statements) should be read in conjunction with BCE’s 2020 annual consolidated financial
	statements, approved by BCE’s board of directors on March 4, 2021.
	These notes are unaudited.
	We, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint
	arrangements and associates.
	Note 1 \|	Corporate information
	BCE is incorporated and domiciled in Canada. BCE’s head office is located at 1, Carrefour Alexander-Graham-Bell, Verdun, Québec, Canada. BCE is a telecommunications and media company providing wireless, wireline, Internet and television (TV) services to residential, business and wholesale customers in Canada. Our Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services and out-of-home advertising services to customers in Canada.
	Note 2 \|	Basis of presentation and significant accounting policies
	These financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting
	Standards Board (IASB), under International Accounting Standard (IAS) 34 – Interim Financial Reporting and were approved by BCE’s board of directors
	on April 28, 2021. These financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as outlined in Note 2, Significant accounting policies in our consolidated financial statements for the year ended December 31, 2020.
	These financial statements do not include all of the notes required in annual financial statements.
	All amounts are in millions of Canadian dollars, except where noted.
	FUTURE CHANGES TO ACCOUNTING STANDARDS
	The following amendments to standards issued by the IASB have not yet been adopted by BCE.
	STANDARD		DESCRIPTION	IMPACT	EFFECTIVE DATE
	Onerous Contracts – Cost of Fulfilling a Contract, Amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets		These amendments clarify which costs should be included in	We are currently assessing the impact of these amendments.	Effective for annual reporting periods beginning on or after January 1, 2022. Early application is permitted.
			determining the cost of fulfilling a contract when assessing whether a contract is onerous.
	Disclosure of Accounting Policies –		These amendments require that entities disclose material	We are currently assessing the impact of these amendments on the disclosure of our accounting policies.	Effective for annual reporting periods beginning on or after January 1, 2023. Early application is permitted.
	Amendments to IAS 1 – Presentation		accounting policies, as defined, instead of significant accounting policies.
	of Financial Statements

						Notes to consolidated	financial statements
BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt \| 39

Note 3 \|	Segmented information
Our results are reported in three segments: Bell Wireless, Bell Wireline and Bell Media. Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance.
The following tables present financial information by segment for the three month periods ended March 31, 2021 and 2020.
			BELL	BELL	BELL	INTERSEGMENT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2021		WIRELESS	WIRELINE	MEDIA	ELIMINATIONS	BCE
Operating revenues
External customers			2,087	623			–	5,706
Inter-segment			13	90			(188)	–
Total operating revenues			2,100	713			(188)	5,706
Operating costs		4	(1,177)	(570)			188	(3,277)
Segment profit (1)			923	143			–	2,429
Severance, acquisition and other costs						(89)
Depreciation and amortization							(1,133)
Finance costs
Interest expense							(267)
Interest on post-employment benefit obligations						(5)
Impairment of assets							(3)
Other income						8
Income taxes							(253)
Net earnings							687
(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
			BELL	BELL	BELL	INTERSEGMENT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2020		WIRELESS	WIRELINE	MEDIA	ELIMINATIONS	BCE
Operating revenues
External customers			2,022	658			–	5,640
Inter-segment			13	94			(183)	–
Total operating revenues			2,035	752			(183)	5,640
Operating costs		4	(1,107)	(597)			183	(3,222)
Segment profit (1)			928	155			–	2,418
Severance, acquisition and other costs						(16)
Depreciation and amortization							(1,088)
Finance costs
Interest expense							(277)
Interest on post-employment benefit obligations						(12)
Impairment of assets							(7)
Other expense						(47)
Income taxes							(243)
Net earnings from continuing operations							728
Net earnings from discontinued operations							5
Net earnings							733
(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
Notes to consolidatedfinancial statements
40 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

	REVENUES BY SERVICES AND PRODUCTS
	FOR THE PERIOD ENDED MARCH 31	2021	2020
	Services (1)
	Wireless	1,503	1,535
	Wireline data	1,965	1,891
	Wireline voice	803	872
	Media	623	658
	Other wireline services	74	62
	Total services	4,968	5,018
	Products (2)
	Wireless	584	487
	Wireline data	144	123
	Wireline equipment and other	10	12
	Total products	738	622
	Total operating revenues	5,706	5,640
	(1) Our service revenues are generally recognized over time.(2) Our product revenues are generally recognized at a point in time.
	Note 4 \|			Operating costs
	FOR THE PERIOD ENDED MARCH 31	NOTE		2021	2020
	Labour costs
	Wages, salaries and related taxes and benefits	(1,034)	(1,041)
	Post-employment benefit plans service cost (net of capitalized amounts)	10		(74)	(75)
	Other labour costs (1)	(239)	(227)
	Less:
	Capitalized labour	255	246
	Total labour costs	(1,092)	(1,097)
	Cost of revenues (2)	(1,742)	(1,654)
	Other operating costs (3)	(443)	(471)
	Total operating costs	(3,277)	(3,222)
	(1) Other labour costs include contractor and outsourcing costs.(2) Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers.(3) Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, information technology costs, professional service fees and rent.
	Note 5 \|			Severance, acquisition and other costs
	FOR THE PERIOD ENDED MARCH 31	2021	2020
	Severance	(97)	(8)
	Acquisition and other	8	(8)
	Total severance, acquisition and other costs	(89)	(16)		Notes to consolidated	financial statements
	SEVERANCE COSTSSeverance costs consist of charges related to involuntary and voluntary employee terminations.
	ACQUISITION AND OTHER COSTSAcquisition and other costs consist of transaction costs, such as legal and financial advisory fees, related to completed or potential acquisitions, employee severance costs related to the purchase of a business, the costs to integrate acquired companies into our operations, costs relating to litigation and
	regulatory decisions, when they are significant, and other costs.
BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt \| 41

Note 6 \|	Other income (expense)
FOR THE PERIOD ENDED MARCH 31		2021	2020
Net mark-to-market gains (losses) on derivatives used to economically hedge equity settled share-based
compensation plans			60	(28)
Early debt redemption costs		(53)	(17)
Equity (losses) gains from investments in associates and joint ventures
Gain on investment (1)			–	10
Operations			(13)	9
Losses on retirements and disposals of property, plant and equipment and intangible assets			(5)	(16)
Other			19	(5)
Total other income (expense)			8	(47)
(1) The $10 million gain in 2020 represents BCE’s share of an obligation to repurchase at fair value the minority interest in one of BCE’s joint ventures. The obligation is marked to market each reporting
period and the gain or loss on investment is recorded as equity gains or losses from investments in associates and joint ventures.
Note 7 \|	Earnings per share
The following table shows the components used in the calculation of basic and diluted net earnings per common share for earnings attributable to
common shareholders.
FOR THE PERIOD ENDED MARCH 31			2021	2020
Net earnings from continuing operations attributable to common shareholders – basic			642	675
Net earnings from discontinued operations attributable to common shareholders – basic			–	5
Net earnings attributable to common shareholders – basic			642	680
Dividends declared per common share (in dollars)			0.8750	0.8325
Weighted average number of common shares outstanding (in millions)
Weighted average number of common shares outstanding – basic			904.5	904.1
Assumed exercise of stock options (1)			–	0.4
Weighted average number of common shares outstanding – diluted (in millions)			904.5	904.5
(1) The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation cost of dilutive options. It excludes options for which the exercise price
is higher than the average market value of a BCE common share. The number of excluded options was 15,031,826 for the first quarter of 2021, compared to 3,458,250 for the first quarter of 2020.
Note 8 \|	Restricted cash
In Q1 2021, we entered into a $107 million subsidy agreement with the Government of Québec to facilitate the deployment of high-speed Internet in certain areas of the province of Québec by September 2022. At the end of Q1 2021, we had received $97 million of the total committed funding, with the remainder expected upon completion of the project.
As a result, we recorded $48 million in Other current assets and $49 million in Other non-current assets as restricted cash with a corresponding liability

in Trade payables and other liabilities and Other non-current liabilities, respectively, on the statement of financial position at March 31, 2021.
Note 9 \|	Debt
On March 17, 2021, Bell Canada issued, under its 1997 trust indenture, 3.00% Series M-54 medium term note (MTN) debentures, with a principal amount of $1 billion, which mature on March 17, 2031, and 4.05% Series M-55 MTN debentures, with a principal amount of $550 million, which mature on March 17, 2051.
Notes to consolidatedfinancial statements
Additionally, on March 17, 2021, Bell Canada issued, under its 2016 trust indenture, 0.75% Series US-3 Notes, with a principal amount of $600 million in U.S. dollars ($747 million in Canadian dollars), which mature on March 17, 2024, and 3.65% Series US-4 Notes, with a principal amount of $500 million in U.S. dollars ($623 million in Canadian dollars), which mature on March 17, 2051. The Series US-3 and Series US-4 Notes (collectively, the Notes) have been
hedged for foreign currency fluctuations through cross currency interest rate swaps. See Note 11, Financial assets and liabilities, for additional details.
The MTN debentures and Notes are fully and unconditionally guaranteed by BCE.
As announced on March 18, 2021, Bell Canada redeemed, on April 19, 2021, prior to maturity, its 3.00% Series M-40 MTN debentures, having an outstanding
principal amount of $1,700 million, which were due on October 3, 2022. As a result, in Q1 2021, we reclassified the Series M-40 MTN debentures from Long-term debt to Debt due within one year and recognized early debt redemption costs of $53 million, which were recorded in Other income (expense) in the income statement.
42 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

	Note 10 \|	Post-employment benefit plans
	POST-EMPLOYMENT BENEFIT PLANS COSTWe provide pension and other benefits for most of our employees. These include defined benefit (DB) pension plans, defined contribution (DC) pension plans and other post-employment benefits (OPEBs).
	COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS SERVICE COST
	FOR THE PERIOD ENDED MARCH 31		2021	2020
	DB pension		(55)	(54)
	DC pension		(36)	(36)
	OPEBs		(1)	(1)
	Less:
	Capitalized benefit plans cost		18	16
	Total post-employment benefit plans service cost		(74)	(75)
	COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS FINANCING COST
	FOR THE PERIOD ENDED MARCH 31		2021	2020
	DB pension		3	(3)
	OPEBs		(8)	(9)
	Total interest on post-employment benefit obligations		(5)	(12)
	FUNDED STATUS OF POST-EMPLOYMENT BENEFIT PLANS COST
	The following table shows the funded status of our post-employment benefit obligations.
					FUNDED	PARTIALLY FUNDED (1)	UNFUNDED (2)				TOTAL
								MARCH 31,	DECEMBER 31,	MARCH 31,	DECEMBER 31,	MARCH 31,					DECEMBER 31,	MARCH 31,	DECEMBER 31,
	FOR THE PERIOD ENDED				2021				2020	2021		2020	2021						2020	2021	2020
	Present value of post-employment benefit obligations							(23,572)	(26,421)	(1,816)	(2,011)	(287)					(317)	(25,675)	(28,749)
	Fair value of plan assets				26,219				27,727	399		402	–	–	26,618	28,129
	Plan surplus (deficit)				2,647				1,306	(1,417)	(1,609)	(287)					(317)	943	(620)
	(1) The partially funded plans consist of supplementary executive retirement plans (SERPs) for eligible employees and certain OPEBs. The company partially funds the SERPs through letters of credit
	and a retirement compensation arrangement account with the Canada Revenue Agency. Certain paid-up life insurance benefits are funded through life insurance contracts.
	(2) Our unfunded plans consist of certain OPEBs, which are paid as claims are incurred.
	In Q1 2021, we recorded an increase in our post-employment benefit plans and a gain, before taxes, in Other comprehensive income from continuing operations of $1,565 million due to a decrease in the present value of our post-employment benefit obligations of $2,957 million as a result of an increase in the discount rate to 3.4% at March 31, 2021, compared to 2.6% at December 31, 2020, partly offset by a decrease in the fair value of plan assets of
	$1,392 million as a result of an actual loss on plan assets of 4.3%.

											Notes to consolidated	financial statements
BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt \| 43

Note 11 |

Financial assets and liabilities

FAIR VALUE

The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.

MARCH 31, 2021

DECEMBER 31, 2020

CARRYING

FAIR

CARRYING

FAIR

CLASSIFICATION

FAIR VALUE METHODOLOGY

VALUE

CRTC deferral account obligation

Trade payables and other

Present value of estimated future cash flows discounted using observable market interest rates

liabilities and other non-current liabilities

Debt securities and other debt

Debt due within one year and long-term debt

Quoted market price of debt

23,401

25,776

20,525

24,366

The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.

FAIR VALUE

QUOTED PRICES IN

ACTIVE MARKETS

FOR IDENTICAL

OBSERVABLE

NON-OBSERVABLE

CARRYING VALUE OF

ASSETS

MARKET DATA

MARKET INPUTS

CLASSIFICATION

ASSET (LIABILITY)

(LEVEL 1)

(LEVEL 2) (1)

(LEVEL 3) (2)

March 31, 2021

Publicly-traded and privately-held investments (3)

Other non-current assets

125

–

122

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

–

Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability (4)

Trade payables and other liabilities

(149)

–

(149)

OtherOther non-current assets and liabilities

113

–

171

(58)

December 31, 2020

Publicly-traded and privately-held investments (3)

Other non-current assets

126

–

123

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

(51)

–

(51)

–

MLSE financial liability (4)

Trade payables and other liabilities

(149)

–

(149)

OtherOther non-current assets and liabilities

109

–

167

(58)

(1) Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. (2) Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3

financial instruments.

(3) Unrealized gains and losses are recorded in Other comprehensive income from continuing operations in the consolidated statements of comprehensive income and are reclassified from Accumulated

other comprehensive income to Deficit in the statements of financial position when realized.

(4) Represents BCE’s obligation to repurchase the BCE Master Trust Fund’s (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price should the Master Trust Fund exercise

its put option. The obligation to repurchase is marked to market each reporting period and the gain or loss is recognized in Other income (expense) in the consolidated income statements.

MARKET RISK CURRENCY EXPOSURESWe use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and sales

and certain foreign currency debt.

Notes to consolidatedfinancial statements

In Q1 2021, we entered into cross currency interest rate swaps with notional amounts of $600 million in U.S. dollars ($749 million in Canadian dollars) and $500 million in U.S. dollars ($637 million in Canadian dollars) to hedge the U.S. currency exposure of our US-3 Notes maturing in 2024 and our US-4 Notes maturing in 2051, respectively. See Note 9, Debt, for additional details.

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a gain (loss) of nil ($15 million) recognized

in net earnings from continuing operations at March 31, 2021 and a gain (loss) of $202 million ($188 million) recognized in Other comprehensive income from continuing operations at March 31, 2021, with all other variables held constant.

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippines Peso would result in a gain (loss) of $5 million recognized

in Other comprehensive income from continuing operations at March 31, 2021, with all other variables held constant.

44 | BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt

The following table provides further details on our outstanding foreign currency forward contracts and options as at March 31, 2021.

BUY

AMOUNT

SELL

AMOUNT

TYPE OF HEDGE

CURRENCY

TO RECEIVE

CURRENCY

TO PAY

MATURITY

HEDGED ITEM

Cash flow

USD

516

CAD

678

2021

Anticipated transactions

Cash flow

PHP

2,756

CAD

2021

Anticipated transactions

Cash flow

USD

479

CAD

614

2022

Anticipated transactions

Cash flow

USD

120

CAD

150

2023

Anticipated transactions

Cash flow – call options

USD

231

CAD

299

2022

Anticipated transactions

Cash flow – put options

USD

231

CAD

295

2022

Anticipated transactions

Economic

USD

100

CAD

136

2021

Anticipated transactions

Economic – call options

USD

CAD

2021

Anticipated transactions

Economic – call options

CAD

USD

2021

Anticipated transactions

Economic – put options

USD

CAD

116

2021

Anticipated transactions

Economic – put options

USD

CAD

123

2022

Anticipated transactions

INTEREST RATE EXPOSURESWe use interest rate options to economically hedge the dividend rate resets on $450 million of our preferred shares having varying reset dates in 2021.

The fair value of these interest rate options at March 31, 2021 was a net asset of $9 million (December 31, 2020 – net liability of $6 million), recognized in

Other current assets, Trade payables and other liabilities, and Other non-current liabilities in the consolidated statements of financial position. A gain of $16 million for the three months ended March 31, 2021 relating to these interest rate options is recognized in Other income (expense) in the consolidated income statements.

A 1% increase (decrease) in interest rates would result in an increase (decrease) of $10 million ($13 million) in net earnings from continuing operations

at March 31, 2021.

EQUITY PRICE EXPOSURESWe use equity forward contracts on BCE’s common shares to economically hedge the cash flow exposure related to the settlement of equity settled share-based compensation plans and the equity price risk related to a cash-settled share-based payment plan. The fair value of our equity forward contracts at March 31, 2021 and December 31, 2020 was a net liability of $32 million and $82 million, respectively, recognized in Other current assets,

Trade payables and other liabilities, Other non-current assets and Other non-current liabilities in the consolidated statements of financial position.

A gain of $60 million for the three months ended March 31, 2021 relating to these equity forward contracts is recognized in Other income (expense) in

the consolidated income statements.

A 5% increase (decrease) in the market price of BCE’s common shares at March 31, 2021 would result in a gain (loss) of $40 million recognized in net

earnings from continuing operations, with all other variables held constant.

COMMODITY PRICE EXPOSUREWe use fuel swaps to economically hedge the purchase cost of fuel in 2021. The fair value of our fuel swaps at March 31, 2021 and December 31, 2020 was an asset of $6 million and $3 million, respectively, recognized in Other current assets in the consolidated statements of financial position. A gain of $4 million for the three months ended March 31, 2021 relating to these fuel swaps is recognized in Other income (expense) in the consolidated income statements.

A 25% increase (decrease) in the market price of fuel at March 31, 2021 would result in a gain (loss) of $3 million relating to fuel swaps recognized in net

earnings from continuing operations, with all other variables held constant.

Note 12 |

Share capital

CONVERSION AND DIVIDEND RATE RESET OF FIRST PREFERRED SHARESOn March 31, 2021, 42,423 of BCE’s 9,542,615 fixed-rate Cumulative Redeemable First Preferred Shares, Series AM (Series AM Preferred Shares) were

Notes to consolidated

financial statements

converted, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AN (Series AN Preferred Shares). In addition, on the same date, 939,786 of BCE’s 1,952,085 Series AN Preferred Shares were converted, on a one-for-one basis, into Series AM Preferred Shares.

The annual fixed dividend rate on BCE’s Series AM Preferred Shares was reset for the next five years, effective March 31, 2021, at 2.939%. The Series AN

Preferred Shares continue to pay a quarterly floating cash dividend.

On April 22, 2021, BCE announced that 105,430 of its 4,984,851 fixed-rate Cumulative Redeemable First Preferred Shares, Series AG (Series AG Preferred Shares) have been tendered for conversion on May 1, 2021, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AH (Series AH Preferred Shares). In addition, 4,100,109 of BCE’s 9,012,249 Series AH Preferred Shares have been tendered for conversion on May 1, 2021, on a one-for-one basis, into Series AG Preferred Shares.

The annual fixed dividend rate on BCE’s Series AG Preferred Shares was reset for the next five years, effective May 1, 2021, at 3.37%. The Series AH

Preferred Shares will continue to pay a monthly floating cash dividend.

Dividends will be paid as and when declared by the board of directors of BCE.

BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt | 45

Note 13 \|	Share-based payments
The following share-based payment amounts are included in the income statements as operating costs.
FOR THE PERIOD ENDED MARCH 31		2021	2020
Employee savings plan		(8)	(8)
Restricted share units (RSUs) and performance share units (PSUs)		(20)	(16)
Other (1)		(2)	(3)
Total share-based payments		(30)	(27)
(1) Includes deferred share plan, deferred share units and stock options.
The following tables summarize the change in outstanding RSUs/PSUs and stock options for the period ended March 31, 2021.
RSUs/PSUs
			NUMBER OF
			RSUs/PSUs
Outstanding, January 1, 2021			2,973,393
Granted			1,161,035
Dividends credited			44,329
Settled				(1,085,424)
Forfeited			(27,829)
Outstanding, March 31, 2021			3,065,504
STOCK OPTIONS
		NUMBER OF		WEIGHTED AVERAGE
		OPTIONS		EXERCISE PRICE ($)
Outstanding, January 1, 2021					15,650,234	59
Exercised (1)		(199,928)	48
Forfeited or expired		(159,042)	60
Outstanding, March 31, 2021					15,291,264	59
Exercisable, March 31, 2021					8,708,876	57
(1) The weighted average market share price for options exercised during the three months ended March 31, 2021 was $56.
Note 14 \|	COVID-19
The COVID-19 pandemic continued to unfavourably impact our financial and operating performance in the first quarter of 2021 as emergency measures
were first introduced in the second half of March 2020. Our Bell Wireless and Bell Media segments continued to be adversely affected in the quarter with a more pronounced impact on media advertising revenues and wireless outbound roaming revenues. Depending on the severity and duration of the COVID-19 pandemic, including the number and intensity of resurgences in COVID-19 cases, the prevalence of variants, the timely distribution of effective vaccines and the scope and duration of measures adopted to combat the pandemic, our operations and financial results could continue to be significantly and negatively impacted in future periods. It is difficult at this time to estimate the magnitude of such future impacts.

Notes to consolidatedfinancial statements
46 \| BCE INC. 2021 FIRst QuARtER shAREhOldER REpORt